What are the Limitations of eCommerce

Businesses

E-Commerce has become one of the most popular mediums of transactions in

the recent years. While it does offer quite a lot of benefits to both buyers and
sellers, it is not totally free from disadvantages. By having an idea of these
limitations, we can address them and come up with a solution.

Here are the top disadvantages and limitations of eCommerce

businesses:

1. Security: One of the main limitations of eCommerce is security. In most

cases, people are hesitant to provide their personal and financial details in
spite of advanced data encryption security systems in place. Moreover, there
are some websites that do not have the capability and features installed to
authenticate transactions. As such, there are instances of fraudulent activities.
The fear of providing financial information like credit card details hinders
the growth of eCommerce.

2. Lack of Privacy: To some extent, the privacy of a customer is

compromised in eCommerce. You need to provide your personal details, such
as address, telephone number, and so on to the seller. There are still lots of
sites that do not have the advanced technology to protect sensitive
information. Moreover, there are also sites that illegally collect consumer
statistics without permission. This is one reason why people get skeptical
while using eCommerce.

3. Tax Issue: In case of different geographical locations, sales tax becomes

an issue. Many a time sellers have faced problems in the computation of sales
tax. Moreover, physical stores have a risk of losing business if online
transactions are exempted from taxation.

4. Fear: In spite of popularity, there still resides an element of doubt in the

mind of people when it comes to online shopping. This is because the
customer cannot physically examine the product and is not sure about the
features and attributes. This is why a lot of people prefer shopping from
physical stores.

5. Product Suitability: As already mentioned, it is not possible for people to

physically examine the product in eCommerce. In many cases, the original
product may not match with the picture or specifications in the eCommerce
site. This absence of ‘touch and feel’ creates a discouraging effect.

6. Cultural Obstacles: As the process of eCommerce encompasses

customers across the globe, the habits, traditions, and culture differ. There
may also be linguistic problems and all these may lead to issues between the
seller and buyer.

7. High Labour Cost: In order to get the whole eCommerce and delivery
process right, a specialized workforce is required. To get all these in the right
shape, companies have to shed a good amount of money and employ a
talented pool of people.

8. Legal Issues: A lot of legal compliances and cyber laws that need to be
taken care of in an eCommerce business. These regulations may vary from
country to country. All these reasons deter businesses from going electronic.

9. Technical Limitations: eCommerce requires advanced technology

platforms for better performance. Some limitations, such as lack of proper
domain, network and software issues and so on can affect the seamless
performance of an eCommerce site.

10. Huge Technological Cost: Last but not the least; a lot of money needs
to be invested to be built up the technical infrastructure needed to run an
eCommerce business. Moreover, they need to be upgraded based to keep
abreast with the changing technology.

In order to minimise these limitations, eCommerce business should have a

proper business plan and implement them with proper strategies.
LIMITATIONS OF E-COMMERCE
Though e-commerce offers many advantages to customers, business,
society and nation, there are still some areas of concern that need to
be addressed. The following are some of the limitations or
disadvantages of e-commerce.

1. Security
The biggest drawback of e-commerce is the issue of security. People
fear to provide personal and financial information, even though
several improvements have been made in relation to data encryption.
Certain websites do not have capabilities to conduct authentic
transactions. Fear of providing credit card information and risk of
identity limit the growth of e-commerce.

2. Lack of privacy
Many websites do not have high encryption for secure online
transaction or to protect online identity. Some websites illegally collect
statistics on consumers without their permission. Lack of privacy
discourages people to use internet for conducting commercial
transactions,

3. Tax issue
Sales tax is another bigger issue when the buyer and seller are situated
in different locations. Computation of sales tax poses problems when
the buyer and seller are in different states. Another factor is that
physical stores will lose business if web purchases are free from tax.

4. Fear
People fear to operate in a paperless and faceless electronic world.
Some of the business organizations do not have physical existence,
People do not know with whom they are conducting commercial
transactions. This aspect makes people to opt physical stores for
purchases.

5. Product suitability
People have to rely on electronic images to purchase products.
Sometimes, when the products are delivered, the product may not
match with electronic images. Finally, it may not suit the needs of the
buyers. The lack of ‘touch and feel’ prevent people from online
shopping.

6. Cultural obstacles
E-commerce attracts customers from all over the world. Habits and
culture of the people differ from nation to nation. They also pose
linguistic problems. Thus, differences in culture create obstacles to
both the business and the consumers.

7. High Labour cost

Highly talented and technically qualified workforce are required to
develop and manage the websites of the organization. Since internet
provides a lot of job opportunities, business organizations have to
incur a lot of expenses to retain a talented pool of employees,

8. Legal issues
The cyber laws that govern the e-commerce transactions are not very
clear and vary from country to country. These legal issues prevent
people from entering into electronic contracts.

9. Technical limitations
Some protocol is not standardized around the world. Certain software
used by vendor to show electronic images may not be a common one.
It may not be possible to browse through a particular page due to lack
of standardized software. Insufficient telecommunication bandwidth
may also pose technical problems.

9. Huge technological cost

It is difficult to merge electronic business with traditional business.
Technological infrastructure may be expensive and huge cost has to be
incurred to keep pace with ever changing technology. It is necessary to
allocate more funds for technological advancement to remain
competitive in the electronic world.